‘How Europe Regulated Itself Into American Vassalage’ ⇥ economist.com

Stanley Pignal, the Economist (here is a gift link from someone, somewhere):

Here is an uncomfortable truth for hand-wringing policymakers in Paris, Berlin and beyond: Europe’s dependency on America Inc is in no small part Europe’s own fault. Decades of over-regulating the old continent’s economy left businesses there unable to compete with American firms, which went on to trounce European ones even in their own backyards. What Europeans could not build quickly for themselves, due to a thicket of regulations, they often imported just as quickly from abroad. That forcing businesses to jump through endless regulatory hoops would put a burden on Europeans was always understood: meeting ambitious green targets, protecting privacy, preventing bank meltdowns or achieving other necessary goals was always going to carry a cost. But the extent to which it also left Europeans in hock to foreigners — for now mostly America, but also increasingly China—has only belatedly become clear.

This is by no means a new argument; it is one the Economist makes constantly, including in a similar article two months ago, and Pignal in a previous column in October. Yet it is worth considering, nevertheless, that too much regulatory oversight has hampered Europe’s ability to compete with the United States. This is a possibility.

I find it telling, however, that Pignal cannot cite a specific example of this. Each paragraph contains an example of some regulation — limitations on the extractive economics of credit card interchange fees, environmental policies, and so on — and they all seem pretty reasonable. Pignal’s closing paragraph is all about how much he agrees with regulating A.I. and antitrust. But the limp conclusion is that it is the combination of sensible policies that has left Europe in an uncompetitive position with the comparatively lax regulatory environment of the U.S., where the highest court has repeatedly ruled against the authority of regulatory agencies.

It is unclear what E.U. regulators ought to do with Pignal’s feedback. It seems very easy to say there are too many regulations and too much red tape. It seems much more difficult to explain which part of the environment, human and animal safety, customer rights, privacy, or good business behaviour must be sacrificed in the name of international competition.